BlackBerry to Separate Cybersecurity, IoT Businesses In 2024

BlackBerry will split its $418 million cybersecurity business and $206 million IoT business into separate, independently operated entities following a strategic review that lasted five months.

See Also: Live Webinar Today | Cyber Resilience: Recovering from a Ransomware Attack

The Ontario, Canada-based vendor will pursue a subsidiary initial public offering for its high-growth internet of things business in the first half of 2024 to help shareholders more clearly evaluate the performance and future potential of each business on a standalone basis. The separation will also allow the cybersecurity and IoT businesses to each pursue a distinct strategy and capital allocation policy.

“Separating our principal businesses will improve our ability to create value for all stakeholders,” BlackBerry CEO and executive chair John Chen said in a statement. “This new proposed structure will further increase both their operational agility and ability to focus on delivering exceptional solutions to their customers.”

BlackBerry’s stock is down $0.18 – or 4.23% – to $4.08 per share in trading Thursday, which is the lowest the stock has traded since May 1, when the company launched a strategic review. The proposed split was announced after the market closed Wednesday after the company spent several monthly evaluating strategic alternatives including a range of potential sale structures as well as separating the businesses (see: Proposed SEC Rules Will Force Boards to Double Down on Cyber).

The separation announcement comes a month before the contract expiration of Chen, who has led BlackBerry since November 2013. BlackBerry’s cybersecurity business has been led since October 2021 by longtime McAfee president and chief revenue officer John Giamatteo, while the company’s IoT unit has been led since May 2021 by longtime HERE Technologies executive Mattias Eriksson.

BlackBerry’s IoT Unit Surges While Security Unit Struggles

The company’s cybersecurity and IoT units each have a very different growth and profitability trajectory in recent years. The cybersecurity unit – which unites endpoint security and endpoint management – saw sales drop 12.4% to $418 million in the fiscal year ended Feb. 28, 2023, while gross margins fall 17.7% to $233 million due to client churn in the product business as well as a drop in professional services sales.

Conversely, BlackBerry’s IoT business – which provides technology for connected embedded systems in the automotive, medical and industrial automation market – grew sales by 15.7% in the recent fiscal year to $206 million, while gross margins jumped 14.2% to $169 million. These trends continued in the fiscal quarter ended Aug. 31, with BlackBerry’s cyber sales dropping 28.8% and IoT sales dipping 3.9%.

BlackBerry’s workforce shrunk by 4.4% from 3,325 employees on Feb. 28, 2022 to 3,181 employees on Feb. 28, 2023 despite stating in spring 2022 that it planned to bring on 250 additional cybersecurity and IoT workers over the next year. Just over half of BlackBerry’s workforce is based in Canada, while a little over a quarter based in the United States and a fifth based in 18 countries outside of North America.

“Separating our principal businesses will improve our ability to create value.'”


– John Chen, executive chair and CEO, BlackBerry

BlackBerry has been giving up market share in the endpoint security space, with the company’s share falling from 1.5% in 2021 to 1.3% in 2022 despite an 8.6% increase in endpoint security sales to $170.3 million, IDC found. BlackBerry’s endpoint security growth rate lagged the market as a whole, which saw 29.2% growth last year. BlackBerry was the 15th-largest endpoint security vendor in both 2021 and 2022.

BlackBerry’s cybersecurity practice draws largely from the company’s February 2019 acquisition of next-generation endpoint security vendor Cylance for $1.4 billion. The company’s cybersecurity offerings include BlackBerry Spark unified endpoint security, BlackBerry AtHoc crisis communications, BlackBerry Alert critical event management, and SecuSUITE secure messaging and phone calls.